At the Preston Company, purchases are recorded at net amounts. On August 5, $40,000 worth of merchandise was purchased on account for terms of 2/10, n/30 and recorded for $40,000. $3,000 of this merchandise was returned, and the account was credited for $3,000.

To reflect the net amount, accounts payable should be adjusted by

$740.

$800.

$0.

Please include process

$860.